Next Move Made In Kentucky Saga

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After months of stagnation a move was finally made in the Kentucky domain name seizure saga. The appeal filed by the state of Kentucky with the Kentucky Supreme Court was accepted and made public. This appeal was filed against the verdict given by the Kentucky Court of Appeals, which went in favor of the domain name holders. Now Interactive Media Entertainment and Gaming Association (iMEGA) and the Interactive Gaming Council (IGC) will have to file response briefs with the Kentucky Supreme Court by June 1st 2009.

To recap the events, the state of Kentucky obtained an order from the court to seize the domain names of 141 Internet gambling companies. The companies filed a suit against this order through iMEGA and IGC. However they case was decided in favor of the state. iMEGA and IGC then appealed to the Kentucky Court of Appeals, where they won. Now the state has gone in appeal to the Kentucky Supreme Court.

The appeal is a mix of the new and the old. The brief opens with ominous words. “Wagers are accepted in an unregulated underworld without effective age verification, identification, or financial accountability… Persons can instantly wager and lose retirement savings or college funds in secrecy.” The state of Kentucky demonstrates the extent to which Internet gambling has pervaded society by citing a Casino City study in 2006. The study says that online gambling sites include 1,083 online casinos, 592 sports books, 532 online poker rooms, 224 bingo sites, 49 skill game sites, 30 betting exchanges, 25 lotteries, and 17 backgammon sites. It highlights that these sites are unregulated and that they erode the state’s revenues from legalized gambling, mainly horse racing. The brief also mentions past cases that were successfully launched against Internet gambling. These include decisions by ClearChannel and Infinity Broadcasting not to accept advertisements from online gambling sites in 2003 after threats from the Department of Justice (DoJ); a $7.2 million settlement between Sporting News and the DoJ in 2006 and the arrests of the founders of Neteller and the subsequent settlement with that company. The latest case referred to was the $300 million settlement that Party Gaming Co-Founder Anurag Dikshit made with the DoJ in December 2008.

The appeal once again raised the issue that iMEGA and the IGC had no legal standing to represent the domain name owners. This has been done despite a clear cut federal court allowing them to do so in the case to declare the Unlawful Internet Gambling Enforcement Act (UIGEA) unconstitutional. That case is also in the legal process. The Kentucky Supreme Court will set the date for the hearings after iMEGA files its response.

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